Industry targets a drop in BoG’s policy rate today

Nov. 27, 2017, 11:49 a.m.

Businesses are seeking that the Bank of Ghana (BoG) will reduce its lending rate again as it announces a policy rate today, Monday, November 27, 2017. They believe that the development should trickle down on interest rates paid on loans they contract from their banks going forward.

The expectations are ahead of the Monetary Policy Committee (MPC)’s engagement with the media to discuss the major economic policy decisions by the central bank.

Monday’s meeting concludes the 79th regular meetings of the Monetary Policy Committee of the central bank. The committee, among others has been looking at the country’s economic health over the past four days and is expected to announce new measures to sustain growth where necessary.

Sharing his expectation, the CEO of the Private Enterprise Federation (PEF), Nana Osei Bonsu made a strong argument for a reduction in the policy rate, citing declines in most economic indicators.

“At least there must be a decline of some sort; I cannot predict the magnitude of that differentiation. But we think that there may be a movement downward,” he stated.

The President of the Ghana National Chamber of Commerce & Industry (GNCCI), Nana Dr. Appiagyei Dankawoso I, also maintained that a possible reduction to 19 percent may be inevitable.

“Before the new government came, it was around 25 percent and in recent times it has been reduced to 21 percent. I hope that the policy rate is reduced to about 19 percent; it is not easy but I hope that it is achievable.”

For this year alone, the MPC has reduced its primary lending rate by 450 basis points.

The figure has dropped from 25.5 percent in January to 21 percent. But this has translated into just about a third of the reduction in lending rates by commercial banks, by 150 basis points to 25.7 percent. The Managing Director of OmniBank, Philip Oti Mensah also believes an accommodating figure should bring respite to businesses.

“Even though inflation has dropped, you would realize that energy costs are still high and also it is still costly to hire qualified staff…I expect the policy rate to remain where it is now… I do not expect it to reduce further.”

Lending rates to drop further – BoG

The Bank of Ghana (BoG) has assured business community of its commitment to reduce its lending rates for commercial banks in the country. This is also expected to prompt a further drop in the lending rates of commercial banks to their customers.

The Central bank is hopeful that the move will also reduce the cost of doing business in Ghana.

The First Deputy Governor of the Bank of Ghana, Dr. Maxwell Opoku Afari who outlined this plan however maintained that the decision will be carried out where conditions permit.